Dealerships That Provide an Incentive for Customers to Return After a Visit Have a 20% Increase In Sales

Statistics Show a 35% Service Visit Increase with Rewards Members

Members Spend 11% More Annually on Service When Participating in a Rewards Program

I think it’s pretty obvious after seeing those numbers that having a rewards program in place can more than triple the overall profit for your dealership.

Customers are always looking for the best deal and the best ways to save money. When you offer a rewards program, you are giving your customers what they want. The upside for you? You create loyal, repeat customers that will return to your dealership time and time again and spend more money while doing it. What’s not to love? By contacting a third-party provider, like LoyaltyTrac to help you setup a successful rewards program, you can increase your customer base and profit.

Also, there is a huge marketing potential for your rewards members. With statistics showing a 300% increase in email open rates, you better have a marketing strategy in place to reach your rewards customers.

Offer special incentives to only your rewards members – like an extra 15% off their next service visit or double their reward points for that entire month.

It is important not to SPAM your reward members. Each customer’s email address is like gold, so don’t blow it by dumping ten or more emails a month into their mailbox. They won’t appreciate it and neither will your bank account. Instead, offer thought-out marketing campaigns each month that have a specific focus and offer real value to your rewards members. Take time to sit down and plan out your marketing strategy for the next two months, or even the whole year and craft engaging content.

By utilizing your rewards members through your email marketing, you will more than triple the ROI for your efforts.

What are some of the successes you have had with your rewards program?

Many of the so-called loyalty programs in operation today don’t really develop loyal customers at all; rather, they create “frequent” customers. Loyal customers do more than just visit your business more frequently than other customers; they are your businesses’ best marketing tool and your biggest fans! They want your business to do well, and they ensure that you’re there for them when they need you by sending more business your way. Besides bringing their own business to you, they encourage others to do the same.

2. Acquire New Customers: While it should not be the central focus of any loyalty program, acquiring new customers is essential to any business and should be a benefit of your loyalty program. How effectively your program attracts new customers will depend on how exciting and how valuable the rewards seem to the target audience. Use your program data to determine demographics of your most loyal customers; then target prospective customers with similar demographics in acquisition campaigns.

3. Move Customers Up to Higher Tiered Rewards Levels: Build into your program the ability for customers to “graduate” to higher rewards when certain thresholds are met. This will encourage lower spenders to increase their spend in order to move up to better rewards brackets.

4. Filter Out Unprofitable Customers: It can be more expensive to retain bad customers than it is to acquire new ones. Customers who only purchase during times of sales and discounts can cost you money rather than increase sales. Design your loyalty program to reward better customers without rewarding those just watching for the bargain buys. Professor Philip Kotler’s adaptation of the Pareto Principle states that while the top 20% of your customers generate 80% of the profits, the bottom 30% of your customers eat up 50% of the profits generated by the 20%. Ensure your program is only rewarding the customers actually bringing in business.

5. Recover Orphan Customers: Salvaging former customers can be infinitely more effective – and much less expensive – than acquiring new customers. Discover what it takes to win back old customers and target this group with “We’ve Missed You” campaigns. Then ensure their new experiences with your business are positive and meet their needs.

6. Increase Customer Lifetime Value (CLV): It’s easy to get discouraged or underestimate a customer’s value when you are viewing their transactions in isolation. Look instead at the bigger picture. Determine what your best customers bring in through lifetime patronage and focus on that when interacting with them. When your customers are valued not simply for one purchase here and there, but for their lifetime business with your company, their loyalty – and their lifetime value – will increase.

7. Target Your Best Customers: Best Customer Marketing (BCM) involves spending more time, energy and resources on your best customers in order to maximize the ROI. Use your loyalty program data to determine who your best customers are, then recognize and reward them.

8. Build Relationships: Always remember that customers are people too. When your program is focused on the “human” aspect of customers, it will go further toward building customer relationships, which in turn leads to improved loyalty – and profits.

10. Adjust Pricing Levels: A good loyalty program can help develop solid pricing structures. If customers are happy purchasing products at a particular price, why discount it? You can also use your loyalty program to study the effects of prices changes (e.g. what customer segments’ changed their buying habits when the price changed?).

11. Respond to Competitive Challenges: By monitoring customers’ purchase histories when new competition opens nearby, businesses can quickly and accurately identify what customers defect to the competition. These customers can then be enticed back with customer-specific incentives, special offers and even direct contact.

12. Select Product Lines Effectively: By knowing your best customers’ buying habits, you can more accurately predict which products lines to keep in stock, which to expand and which to discard entirely.

13. Plan Merchandising Optimization: Again, monitoring customers’ purchase history can allow businesses better determine which inventory items need to be ordered and when, as well as more strategically place merchandise on the sales floor.

15. Selecting New Business Locations: Your loyalty program provides you with valuable details on your customers’ demographics and geographics, allowing you to choose new business locations that would be the most profitable for you and beneficial for your customers.

Lifecycle marketing is one of the most common segmentation approaches used today. For example, if customers in your database haven’t made a purchase in the last 12 months, they would be added to a reactivation program to incent additional engagement before they go dormant. To enhance a reactivation program, marketers might overlay a value-based segmentation using historical data to understand which customers to focus on to re-engage them. The more robust the segmentation, the more able you are to send tailored messages.

Choosing the right segmentation method depends on the data available and a clear understanding of marketing objectives. The most common segmentation techniques today to consider are:

RFM Segmentation: This helps companies that are looking for an inexpensive and simple solution to drive marketing communications based on the recency, frequency and monetary value of customer transactions.

Demographic Segmentation: This approach is ideal for when demand for a company’s products/services is influenced by characteristics such as age, income and home ownership.

Behavioral Segmentation: This technique groups consumers based on similarity of purchase behavior or affinities.

Attitudinal Segmentation: Businesses segment the market based on how attitudes and needs influence purchase behavior.

Value Segmentation: Marketers can define segmentation based on value place by customers on products.

As you get into trigger campaigns, like abandoned cart or browser behavior, the response rate starts to increase. When you add in lifecycle messaging, you get a higher response rate. Each layer adds an additional conversion rate and leads to a more successful marketing strategy with greater ROI.

Source: Database Marketing Guide, April, 2012. Author, Judy Loschen.

How have you used customer segmentation in your marketing efforts? What types of segments have you implemented?

In what ways has marketing segmentation influenced your customers’ experiences with your business?

Email and snail mail promotions are great methods for creating customer loyalty. However, you need to make sure that the information customers include during the sign-up process is accurately addressed in the marketing. There’s no greater feeling than receiving an unexpected coupon or discount on something you want to purchase. It’s a completely different story when the promotion is for something random that doesn’t remotely pique your interest.

Here’s an example of a mail promotion gone wrong: A few weeks ago, I received a pamphlet ad from a loyalty program I belong to at major drug store; the advertisement was primarily for cosmetics and other feminine products that I will never have a use for and it completely alienated me from their program.

For auto dealerships, are you doing this in your service department? For instance, if a customer has just purchased a brand new vehicle and you send them a coupon for a 30,000 or 60,000 mile maintenance service, the chances of that coupon being redeemed are slim to none. Not only are you wasting postage and/or time, but you may be making the customer wonder, “Why did they send this to me?” That customer would probably better appreciate a 10% discount on accessories to personalize their new vehicle.